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Author Topic: Lawyers, Question about Collection Agencies  (Read 3213 times)
schild
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on: March 01, 2014, 07:32:55 PM

So, the wife and I JUST found out that something from her life 7 years ago is kicking her credit score in the ass. She co-signed on an automobile in 2007 and the owner of it decided to stop paying in September 2011. It was repossessed. It has been sent to a collection sagency and we've NEVER been contacted about it. We happened to get a credit report from a class action suit, and noticed it. I'm ready to start busting heads, but a small question for the IAMAL types: What's the protocol here? Do we contact the collections agency? Or do we never contact them and say they never tried to even get in touch with us (they didn't). I don't necessarily want to turn them on to our whereabouts if they've made no attempt whatsoever to reach us, but I'm pretty much at wit's end with the butthead who did this. What do?
Merusk
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Reply #1 on: March 01, 2014, 07:49:31 PM

My experience is that one of you has to pay it off. Her or Him.  Similar situation with a girlfriend I co-signed a credit card for in college.  She stopped paying because, "it was stuff I bought to wear for events I went to with you and I threw it out"  swamp poop

She wound-up paying it off, because she dropped-out of college and needed credit for a car, but it stayed on my record for 7 years after she finally paid it.

The past cannot be changed. The future is yet within your power.
schild
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Reply #2 on: March 01, 2014, 08:03:39 PM

Well, it's her credit, whatever. My credit is impeccable. Thing is, shouldn't the collection agency have done something? Like, I don't know, tried to reach out to us?
Morat20
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Reply #3 on: March 01, 2014, 08:28:03 PM

Well, it's her credit, whatever. My credit is impeccable. Thing is, shouldn't the collection agency have done something? Like, I don't know, tried to reach out to us?
I believe so, but you should first check your state laws on such things. Specifically, how long they have to try to collect on a debt (and, ultimately, take you to court) and furthermore what will 'reset' the clock on your debt.

In Texas, that debt would still be collectible, for instance (I think the period is 5 years). But first, if you're contacted -- dispute the validity of the debt. NEVER, ever, EVER admit to anyone (over the phone or in writing) that your wife is liable, could be liable, or had anything to do with it. Refuse to discuss it over the fun, tell them you wish all further correspondence to be in writing.

If you haven't heard from a loan agency, don't go borrowing trouble.

Frankly, though, the reason you probably haven't heard from anyone is if they made payments for 4 years on the car, then the repossessed car probably covered the bulk of the outstanding loan, and it's not worth anyone's time to hassle her for it. Not that they might not try, making up all sorts of penalties and trying to get her to admit the debt is valid -- but that generally doesn't happen until the debt gets sold a few times and hits the real bottom feeders. Probably just too little money there to bother anyone but the person they took the car from, if that at all.

But seriously: Never admit you owe a penny. Never admit you even borrowed the debt. Claim you have no records, ask for everything in writing, tell them not to contact you by phone, and they'll generally round-file it as not worth the hassle.

As for the credit ding -- you can try talking to the credit agencies and play the "She had nothing to do with that car since 2007, never was responsible for payments, etc" but it'll probably stick on her credit anyways for a few years. Perils of co-signing a loan.
angry.bob
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Reply #4 on: March 01, 2014, 08:46:04 PM

Well, it's her credit, whatever. My credit is impeccable. Thing is, shouldn't the collection agency have done something? Like, I don't know, tried to reach out to us?

Not a Lawyer, but have had to deal with stuff like this several times. Not accounting for very minor differences for individual state law the options are 1) Pay off whatever money is owed. 2) Declare bankruptcy to clear the debt. 3) Do nothing and live with the hit to your credit. I want to say some states have a time limit for attempts at collection though. Best advice is to probably see a local bankruptcy lawyer and see what he says. It should be pretty cheap since they're normally dealing with people who are broke as fuck.

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MahrinSkel
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Reply #5 on: March 01, 2014, 09:29:37 PM

Having had to wait out the statute of limitations a few times (once because my father had been using my social, then again because of hospital debt), I can tell you it ranges between 5 and 7 years, depending on the state (used to be they could pick their jurisdiction and it was always 7, but that changed a few years back).  In general, what they said: Don't ever go on record as admitting to the debt unless you're under oath, don't pay them a small amount hoping that will get them off your back (it both acknowledges the debt and marks you as an easily rattled pigeon, sets off a feeding frenzy for collectors), tell them to do everything by mail, and wait for the clock to tick over.  Don't refer them to your lawyer unless they've actually hit you with a court summons, as they'll gladly run up your billing by calling him every day.

Most likely, since it is already on her credit report, they entered it after the repo sale and that was the end of it (they'll generally hold off on that as a threat to encourage collection if they think they actually can).  If she *really* needs to clear her credit before it rolls off, they'll try to get as much as they can out of it before clearing it, so make them show exactly how much was outstanding after the car was sold off.  If anyone comes to collect, it's probably been sold on three or four times and they may not even have any of the original paperwork, so demand they produce it before you'll even discuss it.

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Reply #6 on: March 01, 2014, 11:35:15 PM

Not much reason to bust heads from how you described it since it is a valid debt.  They have no obligation to contact you.  That's the whole reason for putting it on a report, to get you to contact THEM to get it taken care of.  Even waiting out the statute of limitations will only mean they can't sue you for it, doesn't mean it won't still be on the credit report (they age those things so eventually it won't hit it as hard).   You could offer to settle it for a percentage but even then it will only show up as "satisfied" although some outfits will (given the right monetary incentive and making it explicitly a part of the settlement) file the paperwork to get it taken off as an "error".   Chalk it up to Exhibit A as to why you never lend your credit to anyone.

I had a bill hit my credit report because the geniuses at a hospital sent the bill to an address that was over 15 years out of date. I was able to get it taken off but only because I paid the bill off and demonstrated why I didn't pay it initially. 


***DISCLAIMER: This is general advice about debt collection practices and is not intended as legal advice and we do not have an attorney-client relationship. Consult a local attorney for advice specifically relevant to your situation.

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Lantyssa
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Reply #7 on: March 02, 2014, 06:34:01 AM

Well, it's her credit, whatever. My credit is impeccable. Thing is, shouldn't the collection agency have done something? Like, I don't know, tried to reach out to us?
As I work in collections I can tell you that pretty much one of the two has to pay it off.  And it will still be on future credit reports, just listed as paid in full.  (This is why you should never, ever co-sign unless it's for an item you're willing to pay for even if it's never in your possession.  Helping a parent or a child at most.)  An old account like that won't be something actively worked without the owning agency noticing a positive uptick in the credit score, and most won't have a program in place to do so.  Because of that it will stay in limbo indefinitely.

What I am assuming with the repossession is they sold it at auction, but rarely will the proceeds cover the full amount of debt.  Now the one recourse is that a seven-year old debt can probably be settled for 35% or so of the remaining balance, maybe even less if the first-party is contacted directly.  The trick is convincing the butthead to care enough to contact them and settle without getting involved herself.

Lawyers won't help you much unless they do start calling and they break one of the governing regulations such as FCRA.  But they need to be calling you to break one of the rules... (Which isn't hard because there's a ton of regulations and collection agents aren't usually that smart or dedicated, but if they smell money they're like a dog with a meaty bone for tenancity.  It's not something I'd recommend willingly subjecting yourself to.)

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Merusk
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Reply #8 on: March 02, 2014, 08:51:29 AM

Well, it's her credit, whatever. My credit is impeccable. Thing is, shouldn't the collection agency have done something? Like, I don't know, tried to reach out to us?
What Ab, said.  It's an obligation YOU (well, your fiancee) entered in to.  It's the responsibility of the debtor to keep track and then pay it back. The holder doesn't have to remind you if they get fed up with waiting.

Also, when he talks about settling for a percentage, I've heard stories of people doing this and then the collector sells it to another agency and you're back in the same hole with ANOTHER mark on the credit. You need them to give you a statement that you are cleared of the debit, not just brought current.

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Morat20
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Reply #9 on: March 02, 2014, 09:36:40 AM

Also, when he talks about settling for a percentage, I've heard stories of people doing this and then the collector sells it to another agency and you're back in the same hole with ANOTHER mark on the credit. You need them to give you a statement that you are cleared of the debit, not just brought current.
Which is one reason you never acknowledge the debt as valid (ask for proof, ask for it to be mailed, say you have no memory of it, etc) -- you don't want them resetting the clock on it. Plus, if they don't have the paperwork they can't collect, and without paperwork you can push to have it removed from her credit report.

But honestly, if it's just a ding on her report then likely they collected or are collecting from the other party after repossessing the car. Otherwise they'd be going after both signatories.

Which means if they contact you (or you decide to contact them to clear the credit ding) you ask for paperwork on what steps they've taken to collect, how much the debt is, and how much has been paid by the primary party (they person they took the car from and who was paying the bills).

This is why I don't cosign loans, and why when I got divorced half the divorce paperwork was legalese legally assigning marital debt and legally severing any mutual credit cards to one party or the other. Thankfully we didn't have more than a few hundred dollars worth of debt, but I still had to occasionally send paperwork and part of the divorce decree on one credit card because it was hers alone and it kept showing up on my credit report.
Salamok
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Reply #10 on: March 14, 2014, 10:51:59 AM

Not getting into the ethics of the situation but my first advice to anyone in a similar situation as this is to dispute it with all three credit bureaus, this results in requiring the debtor to provide proof of the debt, which a surprising number of junk debt style debtors somehow fail to acquire and even the original debtors sometimes lose records. 

Personally I would not feel bad about not repaying this particular debt for the following reasons:

#1 - They apparently didn't make a very solid attempt to contact her when they repo'd the vehicle.

#2 - By not contacting her she was unable to make some decisions like "hey here is a car that is almost payed off maybe I can just pay it off and sell the car to make myself whole".

#3 - If this all went south 3 years ago I seriously doubt that the original debtor is involved anymore, they wrote it off and sold it for pennies on the dollar to xyz shitbag debt collector corp.

#4 - If she pays xyz shitbag debt collector corp. then  xyz shitbag debt collector corp. can't do dick to remove any credit report hits that the original debtor may have dinged her with.

In summary if the original debtor is still the one persuing the debt then I would pay it, if that is not the case then I probably would not. 
Ingmar
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Reply #11 on: March 14, 2014, 11:46:13 AM

Yeah, as Salamok says, you should be addressing this with the credit agencies, not the collection agency, at least as the first step. Dispute it and it has a pretty decent chance of just going away.

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schild
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Reply #12 on: March 15, 2014, 12:03:40 AM

We haven't contacted anyone yet. We may just let it ride, but man does this shit fuck up credit.
Salamok
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Reply #13 on: March 15, 2014, 08:41:17 AM

We haven't contacted anyone yet. We may just let it ride, but man does this shit fuck up credit.

Just fill out 3 dispute forms and pretend you don't know what this debt is, takes 10 minutes.
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Reply #14 on: March 15, 2014, 08:56:36 AM

Back when I was in the finance business, any payment activity would reset the clock in terms of it dropping off the credit reports.

For example, if I had a Debt that defaulted in 2008 it would normally drop off my credit report in 2015.  However, if I make a payment today, it won't drop off until 2021.  As far as I know it still works this way,  but I'm sure someone can confirm.

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Phildo
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Reply #15 on: March 15, 2014, 02:19:18 PM

My thoughts are with you during this dark time.  I hope your wife doesn't get repossessed, I was fond of her.
squirrel
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Reply #16 on: March 16, 2014, 12:57:09 AM

Back when I was in the finance business, any payment activity would reset the clock in terms of it dropping off the credit reports.

For example, if I had a Debt that defaulted in 2008 it would normally drop off my credit report in 2015.  However, if I make a payment today, it won't drop off until 2021.  As far as I know it still works this way,  but I'm sure someone can confirm.

Yeah my understanding is this is how it works for a lot of places - even across the border here in Canuckistan. I had a bunch of debt due to bad choices I made like 15 years ago, most I paid off, but some were in an ex's name that I didn't know about at all. I was advised not to acknowledge the debt in anyway, payment or dispute, as it reset the clock. Probably not relevant to you Schild but for anyone else, sometimes it does make sense to play dumb.

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Reply #17 on: March 17, 2014, 08:38:00 PM

Schild, PM me. I don't work in your state, but this is my primary practice area.

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schild
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Reply #18 on: March 17, 2014, 08:45:31 PM

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